Nokia Paints Mixed Picture

Nokia ( NOK) posted a solid third quarter and became the latest big wireless player to boost industrywide handset sales guidance, though the Helsinki company warned that margins will be pressured by a growing dependence on cheap phones.

For its third quarter ended last month Nokia earned $1.05 billion, or 24 cents a share, up from the year-ago $815 million, or 18 cents a share. Revenue rose 18% from a year ago to $10 billion. Analysts surveyed by Thomson First Call had forecast a 22-cent profit on sales of $10.3 billion.

The company said latest-quarter gains were driven by strong mobile device sales volume. Like rival Motorola ( MOT), Nokia said it gained a point of handset market share in the latest quarter, putting it at an industry-leading 33%. Nokia boosted its full-year industry handset sales guidance to 780 million units from the previous 760 million target, up 21% from 2004's record total.

But the company said average phone selling prices dropped in the third quarter, and Nokia sees them dropping further from here. "This is primarily because mobile device volumes from Latin and North America, where low-end products predominate, are expected to represent a significantly higher proportion of Nokia's overall device volumes in the fourth quarter, compared with the third quarter," the company said, adding that it sees these emerging markets as the industry's growth driver as more developed markets reach saturation.